Rep. Budget Reform

If former senator Phil Gramm could have been in two places at once last June, he might have found a way to testify before a house committee on financial-services legislation. But he was traveling on business in Europe, and so he asked Jeb Hensarling, a former aide who is now a congressman, to deliver prepared remarks in his absence. “I tried to speak in an accent that the entire committee could understand,” jokes Hensarling, whose own drawl is only slightly less thick than Gramm’s.

Among conservatives, few senators have ever been as popular as Gramm — a hard-driving budget hawk who delivered principled leadership until he retired from public life. In 2002, the same year Gramm chose not to run for reelection, Hensarling was sent to Congress for the first time, from a district that starts in Dallas and sprawls eastward. Since then, he has taken on many of the issues that once motivated his mentor, most notably the crucial but often thankless job of promoting process reforms to rein in federal spending.

The 48-year-old Hensarling is short, wiry, and energetic. He was barely out of high school when he came under Gramm’s influence: He enrolled in Texas A&M and signed up for a banking class taught by a professor who was beginning to think about politics. “Everybody knew that if you were a serious economics student, you had to get with Gramm,” he says. Several years later, after Gramm had won a seat in the House, Hensarling got with him again, by securing an internship with former professor. It was the beginning of a long professional association in which Hensarling coordinated Gramm’s constituent services and served as executive director of the National Republican Senatorial Committee when Gramm was its chairman. The experience positioned Hensarling not only to make his own bid for Congress, but possibly to inherit Gramm’s reputation as one of the smartest strategists in Washington’s frustrating budget battles.

“Spending is out of control,” says Hensarling. “Everybody understands that.” Indeed, the facts are grim, especially for conservatives who once thought that a Republican in the White House and GOP majorities in Congress would inaugurate an era of fiscal discipline. Since George W. Bush arrived in Washington, federal spending has grown by 33 percent, which is twice as fast as it grew under President Clinton. Defense and homeland security account for only 35 percent of the expansion, according to the Heritage Foundation. The bulk of the spending increase has gone to entitlement programs, farm subsidies, the Department of Education, and so on. “We’re spending more money per household than we have at any time since the Second World War,” says Heritage analyst Brian M. Riedl. “Unless something happens, we’re headed toward a real crisis.”

Short of a sea change in Washington’s political culture — don’t hold your breath — there are no quick solutions to the entrenched problem of runaway spending. “There will never be a substitute for courage and principle among members of Congress,” says Hensarling. “And a lot of guys up here, especially from the class of 1994, are fatigued from having charged the machine-gun nests for so long.” Perhaps worn-out lawmakers simply ought to retire. But no matter what they do, there are a handful of measures that might make it easier for conservatives to show courage and display principle in future fights. Collectively, these measures go by the sleep-inducing name of “budget process reform,” but please stay awake: They may be essential first steps in any effort to turn off the spigot of federal spending.

“What we have around here is a machine that’s been built to spend money,” says Hensarling. “The rules are stacked in favor of people who want to spend money.” Because much of the budget is calculated from formulas that result in automatic spending increases, the size of government may be expected to grow by 6 to 8 percent every year for the foreseeable future — automatically. As baby-boomers age and begin to qualify for senior-citizen entitlements, the challenge of keeping costs in check will only worsen, especially if Congress continues doing business more or less the way it has since it passed the Budget Act of 1974.

Take baseline budgeting. This involves estimating how much federal spending is projected to increase because of mandatory programs. The entire calculation rests on the assumption that a growing government is just the natural order of things. And so if a few politicians propose reducing the rate of growth on spending that has not yet actually occurred — recommending, for instance, that entitlements increase by 6.2 percent rather than 6.3 percent — they get slammed by liberals as Scrooge-like misanthropes.

That’s exactly what happened to Rep. Thad McCotter, a Michigan Republican who dared to defend a modest proposal to slice $50 billion out of future budgets. The Detroit News greeted McCotter on the morning of December 5 with this top-of-the-front-page headline: “Federal cutbacks threaten poor.” The story went on to quote a person who suggested that she would “be starving” if these projected expenses — all of them products of baseline budgeting — were pulled back by the rapacious level of one-tenth of 1 percent.

The legislation that Hensarling has proposed — called the Family Budget Protection Act (FBPA), and co-sponsored by Republicans Chris Chocola (Indiana) and Paul Ryan (Wisconsin) — would virtually eliminate baseline budgeting. It would also impose spending caps and force Congress to deal with its own budget the way that most families deal with theirs: decide how much money they can afford to spend, and then prioritize within those limits.

Another key provision would address the specter of a government shutdown that looms every time Congress fails to meet budget deadlines (which is a regular occurrence). This is the problem that confounded Newt Gingrich when he squared off against President Clinton over federal spending a decade ago. Republicans never figured out how to prevail in these D.C. donnybrooks. The FBPA would offer a helpful reprieve by requiring the government to keep spending at current levels, as if Congress were passing a series of continuing resolutions.

The bill includes other features that would help shift the home-field advantage away from the spenders and toward advocates of limited government. Every federal program, for instance, would come with an expiration date, forcing Congress to reappraise its value at recurring intervals. “This would force liberals — finally — to play a little defense,” says Hensarling. “They would spend their time not creating new programs but defending the ones they’ve already got.” What’s more, the bill would grant the president enhanced rescission authority, which would function as a kind of line-item veto that would (presumably) pass constitutional muster.

The chief problem with any proposal to reform the budget process is that it excites almost nobody: “Enhanced rescission authority” doesn’t exactly trip off the tongue, and it’s much harder to explain than a tax cut or a bridge to nowhere. In some ways, the FBPA is a proposal that only a Beltway budget wonk could love — except that most Beltway budget wonks don’t love it because they by and large approve of the way Congress spends cash right now. Last year, when Congress voted on portions of Hensarling’s bill offered as amendments, they didn’t come close to passage.

That’s why some conservatives worry that this small-bore approach will never lead to meaningful change. The Heritage Foundation has endorsed an alternative that shares the goal of fundamentally altering the budget-process mindset: a federal law modeled on Colorado’s Taxpayer’s Bill of Rights (TABOR), which restricts the growth of government to the combined rate of inflation and population increase. The irony is that although incremental steps have trouble gaining popular support — Hensarling’s legislation is a prime example — more radical ones are easier to understand. Therefore, at least in theory, they are easier to pass. But making something easier to pass should not be confused with making it easy to pass: A federal TABOR would be enormously controversial, and the public might even oppose it. In November, for example, Colorado voters approved a partial repeal of their state’s spending restrictions. That election result certainly didn’t provide any momentum to the federal effort. The fate of a TABOR-like initiative scheduled for the ballot next year in Ohio will be watched closely — especially by Republican presidential candidates in search of big ideas.

In the meantime, Hensarling is satisfied by a promise from party leaders that the House will take up some version of his budget reforms next year. “With our legislation, we’ve written what we consider to be the gold standard,” says the congressman, convinced that even a watered-down version is better than nothing. “Maybe we’ll wind up with the rusty-tin standard. We’ll have to wait and see.”

A gold standard, whether Heritage’s or Hensarling’s, is certainly worthy of aspiration — even if nobody ever reaches it. The same might be said of the Gramm standard. By one reckoning, however, Hensarling is well on his way to meeting that goal. “I hope people will remember Jeb long after they’ve forgotten me,” says the retired senator. “He has too much ability just to be my protégé.”